Shop Your Rate Without Being a Jerk

I often hesitate to share anything that is adjacent to complaining about my job. The truth is, I think I have the best job in the world and I wake up every morning looking forward to doing it, even when it’s stressful. On the other hand, not mentioning the common frustrations feels a lot like abstinence-only mortgage education.

It happened again last night- the text no lender wants to get: “I have decided to go with my credit union. I appreciate your help. Thank you so much!” - total punch in the gut. I had spent much of the last few days worrying about that client’s file as I watched the markets move and my emails going unreturned, so I wasn’t shocked, but it stings every time. When I asked for the terms her credit union offered, it was pretty clear that either her credit union had a personal favor to call in with the state and county tax authorities, or they were vastly underestimating some third party fees, but it was too late by then.

Do I think any client set out thinking “I’m going to get Grace to do the up front work and convince the seller to take my offer based off her reputation, and then ghost her like a tinder match as soon as I get under contract?” No- I think that frequently clients don’t know how to compare apples to apples and when they price check later and think there is a big difference, they’re so embarrassed to tell me that they are thinking about using someone else who hasn’t done all that for them, that they’d rather avoid that conversation. It’s awkward.

This isn’t going to turn into a guilt trip about how you should be happy to pay more because I am just that cool. It’s unpopular in mortgage circles when I say this, but we as originators need to be realistic about what kind of value we deliver to our clients and how much it really makes sense for them to pay for that. I’ve had clients come to me with estimates from other lenders that were a full 1% higher in rate than what I had to offer. I’d fire myself over that. I’d expect my family members to do the same. I want my clients to sit at the closing table and have their settlement agent raise their eyebrows and say “Wow. that’s pretty good right now. Good job, Grace,” when they get to your closing disclosure.

So, let’s talk about how you can shop for your rate while treating your originator with respect and courtesy.

Communicate Up Front

Let me know your plans. If you are a super shopper and nothing I do will be worth 5 dollars more in cost than the Internet Bank of Turkmenistan that’s only open every other Tuesday, that is totally cool and your right as a consumer. If you are still talking to a couple other similar local lenders, that’s great too. I’ve been known to refer clients to other lenders when they can get a better deal on a specific program elsewhere and I’ll tell you honestly what the pros and cons are and how to make that comparison. Knowing your level of commitment does, however, give me the understanding of what level of service you are willing to pay for so that we are on the same page about what you want and need.

Compare Apples to Apples

Not all lenders are relationship- based. Think about how you found someone: was it because they’re good, or because they spent a lot of money advertising that they’re cheap? If the latter, they probably are well aware that you’re never going to call them back after this loan and their process is going to reflect that. A common strategy there is vastly underestimating the third party closing costs. All of those costs with the exception of the lender fees will be the same with every lender, the difference is just how we estimate up front. I typically go higher, because I don’t want you panicking before closing that you need a few extra grand you weren’t planning on. If I just wanted to win your deal and didn’t care if you liked me at the end, I’d do the opposite, and it would work.

Do some of your shopping early

Your actual rate and cost for that rate won’t be final until you are under contract and have a locked loan estimate. On the other hand, lender margins are typically going to be pretty similar as compared to the markets, and you can narrow down your options with some calls early on in the process. Right now, my rates are comparable for average scenarios to the big price leaders that advertise heavily online, but the time to figure out what is a real quote and what is a bait and switch should be before the clock is ticking on your closing date.

Give Me the Last Shot

Federal compliance laws prohibit us as lenders from offering different quotes to different people based off anything except their credit qualifications. We have a set pricing formula and deviating from that in any way means we need to be able to answer to the federal government why we did that and why it had nothing to do with your race, gender, and so on. A written quote from a competitor gives the lender who sees it a serious advantage, because they are now in the position of being able to analyze whether the loan makes sense and say yes or no. The lender who gives you clear numbers quickly is always the loser of that game, no matter what. If someone has worked on your loan and you think they deserve a chance to be paid on it, let them be the one to beat that quote.